'LARGE IS NO LONGER IN CHARGE' SAYS VIACOM CHIEF

Big Media Accelerates Push for Internet, Wireless and VOD Plays

NEW YORK (AdAge.com) -- Searching for growth stories in a largely flaccid media market, Viacom, Time Warner and Comcast underscored their efforts to expand a new media footprint in the realms of Internet broadband, wireless and video on demand when they reported their second-quarter results earlier this week.

During earnings calls this week, media companies like Viacom, Comcast and Time Warner played up online and broadband strategies as growth segments for their businesses.

'Nimble and swift'
Viacom's chairman-CEO, Sumner Redstone, who is expected to step down next year when the media giant splits in two, opened an analysts’ call yesterday saying, “Agility and innovation will separate the winners from the losers. In the 21st century, large is no longer in charge. Leverage will belong to the nimble and the swift and of course content will always remain king.”

The company reported net income at $717 million for the period, with cable sector advertising performance one of the highlights. Cable network revenues were up 14% to $2 billion, with the increase driven by 19% growth in advertising revenue at MTV Networks and cable channel BET. Affiliate fees paid by cable and satellite operators were also up 9%. At the broadcast TV segment, which includes CBS and UPN, revenue declined 1% to $2.03 billion, though ad revenue was up 4%.

Reworking offerings for online
The company is in the process of reworking its entertainment, sport and news offerings online. Les Moonves, Viacom's co-president and co-chief operating officer, said: “We’re looking to a world where DVRs are part of our lives and we’re working with advertisers on innovative ways to reach these avid viewers through product placement and other techniques to retain and capture new revenue streams.”

Mr. Moonves and Tom Freston, the other co-president and chief operating officer, each sought to outline his own initiatives in such areas as Internet broadband and wireless. After Viacom splits, Messrs. Freston and Moonves each will become CEO of one of the new companies.

Mr. Freston, who will head a company to be called Viacom that will include cable divisions and the Paramount movie studio, during the call focused on broadband music adjunct MTV Overdrive: “Unique visitors and video streams are already well into seven figures. We’re rolling out these broadband channels for each of our major brands this year, with a unique feel and look for each of them.” MTV is also partnering with Virgin Mobile and Verizon on other MTV-related services such as programming, text updates and messaging. He also said he was looking at new cable channels that will have a significant video-on-demand component.

Mr. Moonves, who will head a company housing CBS and Viacom's radio and billboard assets, sounded a similar note: “70% of our revenue comes from advertising, and we plan to leverage our leadership positions in multiple platforms to ensure we make the most of this revenue stream. ... This includes the Internet, cell phones and possibly video on demand as we’ve started to see the consumer appetite grow for our TV product on this platform.”

On Wednesday, Time Warner reported a net loss of $321 million compared with a profit of $777 million for the year-ago period, due to tough comparisons in its movie division. It also set aside $3 billion in reserves for lawsuits relating to its merger with America Online in 2000.

Improvements at AOL
Time Warner Chairman-CEO Richard Parsons chose to highlight the new free AOL.com to capture a growing portion of the online advertising pie. Ad revenues at AOL increased 45% to $320 million. The figure reflected a 38% growth in paid search and $60 million from advertising.com. Time Warner said AOL will begin breaking out new statistics on page views and the amount of time consumers spend with AOL by the end of the year.

Time Warner’s TV division, which includes Turner Broadcasting and HBO on cable and the WB on broadcast, saw revenues up 5%, driven in part by ad revenue growth of 8% at the Turner networks, which include TBS, TNT and CNN. The company did not break out ad revenues for the WB.

Comcast On Demand
Philadelphia-based cable systems operator Comcast Corp. reinforced the growth of its video-on-demand offerings as well as the inroads it is making on the advertising market. The cable operator saw pay-per-view revenues up 24%, driven by its On Demand product and a reported 6 million orders for PBS Sprout, an on-demand channel launched at the beginning of the year. Advertising revenue from its cable operations grew 9.9% in the quarter to $362 million.

Comcast’s chief operating officer, Stephen Burke, said a deal with movie pay-TV company Starz Encore would expand the free movie offering on its on-demand properties come October. The company reported that second-quarter revenue climbed 11% to %5.6 billion as a result of rate increases and a 29% increase in high-speed Internet connections. Net income rose to $430 million from $262 million a year ago.